The personal credit crunch

It’s a law of the financial jungle that where there is debt there is desperation and where there is desperation you can sell all manner of dodgy ‘solutions’.

Last year, commercial radio stations were full of ads telling us that — thanks to a ‘little-known loophole’ — half our debt could be wiped off if we would just ring the given number. You may even have been cold-called by computers about this fabulous ‘new’ idea. In fact they were just peddling Individual Voluntary Arrangements to the unwary. An IVA is a binding agreement with your creditors under which you pay off a portion of your debts, usually in monthly instalments over five years, in exchange for the writing off of the rest of the debt. It is an entirely legal debt solution, one stage below full bankruptcy, and it can be the right answer for some people — but by no means for all.